Automated actions based on restrictions

ABSTRACT

A technique for resolving a violation of an investment account restriction is provided. The restriction is associated with the holding of one or more securities in an investment account. A restriction definition and an associated resolution rule are stored in a data repository. A received order to perform an investment account management action is processed to determine that performance of the action violates the stored restriction definition. The associated resolution rule is then retrieved based upon the determination and then executed. Indications of the determined violation and of the executed resolution rule are stored in the data repository.

TECHNICAL FIELD

The present invention relates to investment portfolio management andmore particularly to automated processing of investment restrictions.

BACKGROUND ART

A money manager is an entity that manages an investment on behalf of aninvestor. An individual money manager has an investment style thatreflects a particular investment philosophy. For example, a moneymanager's investment style might be large cap growth, large cap value,small cap, or fixed income. Of course, other investment styles areknown. A money manager defines a style model that reflects his or herparticular investment style. The investment is, accordingly, transactedin accordance with the style model. An individual money manager may havemultiple investment styles. In such a case, that money manager isassociated with multiple style models, each reflecting a differentinvestment style.

A money manager often manages investment accounts for one or moreclients. A client can be any of a number of different types of entities,including a sponsor; an individual broker or a brokerage firm, sometimesalso known as a broker dealer (essentially synonymous with “sponsor”);an outsourcer; a holding company; or an investment manager. Thus, aninvestor may be several steps removed from the money manager managingthe investor's investment. For example, the investor may work with afinancial advisor who opens an account on the investor's behalf with abrokerage firm, perhaps through a broker. The brokerage firm in turnopens an account with the money manager. However, other times thefinancial advisor may manage the investment account directly, and thusact like a money manager. Such a situation is referred to as a“rep-as-manager” scenario. It should also be noted that a money manager(or entity performing the function of a money manager) may manageinvestment accounts associated with different programs offered toinvestors by a client. For example, one account might be part of amulti-strategy portfolio (MSP) program in which different portions of aninvestor's investment are managed by different money managers, whileanother account might be part of a “rep-as-manager” program.“Rep-as-manager” programs are typically created by a client (in thiscase, more specifically a sponsor or brokerage firm), as are many otherprograms. Other examples of programs include mutual fund programs,traditional wrap programs, and proprietary wrap programs. In addition,an investment account may be associated with a client's chosen“strategy”, which could further be reflected in one or more programsthat a client offers. A few examples of “strategy” include:“conservative”, “aggressive”, and “international”.

As an example of a style model, a money manager could define an assetallocation for a style model as shown in Table 1 below. TABLE 1 ASSETPROPORTION IBM 20% CKFR 10% STSH 30% AOL 10% Cash 30%

For the exemplary asset allocation shown in Table 1, as an initialinvestment is received it is distributed in accordance with the stylemodel. If the initial investment were $10,000, the investment would bedistributed as shown in Table 2 below. TABLE 2 ASSET HOLDING IBM $2,000CKFR $1,000 STSH $3,000 AOL $1,000 Cash $3,000

Over time, due to account activity and other factors, the accounttypically will become either underweighted or overweighted in one ormore assets. Either as an automatic function, or manually initiated, theaccount is rebalanced to bring it back in line with the style model.Rebalancing typically includes selling overweighted assets andpurchasing underweighted assets. As will be understood by one ofordinary skill in the art, money managers typically utilize automatedportfolio management systems in administering accounts. Thus, the moneymanager's automated portfolio management system will typically identifythe need for rebalancing and identify the trades and other transactionsnecessary to rebalance the account.

Oftentimes restrictions are placed upon one or more accounts managed bya money manager. Some money managers allow an investor, perhaps througha client, to place one or more restrictions on the investor's individualaccount. Such a restriction is known as an account level restriction.Sometimes a money manager places one or more restrictions on the entirestyle model such that the restrictions apply to all individual accounts.Such a restriction is known as a style level restriction. It should benoted that, as allowed by a money manager, another entity mightestablish a style level restriction (e.g., a client). Also, some moneymanagers facilitate program level restrictions, which apply to accountsassociated with a particular program. Often, program level restrictionsare established by a client and apply to accounts that are associatedwith that client and belong to a certain program. And, some moneymanagers allow client level restrictions that apply to all accountsassociated with a particular client. A restriction that applies to morethan one account is said to apply to a trade block.

A restriction, no matter the level, typically affects “buy” and “sell”decisions. For example, a restriction might stipulate that no AOL stockbe held in an account, or that CheckFree should never drop below tenpercent of the total holdings of an account. A restriction may beestablished at any point in time: before an initial allocation of assetsaccording to a style model, after an initial allocation, or even afterone or more rebalancings.

Conventionally, during distribution of new investments and rebalancingof existing accounts the money manager portfolio management system willdetermine if any applicable restrictions exist. In the above example ofa restriction against ownership of AOL stock, a restriction violationwould be detected. This detected violation would then be flagged forreview and resolution by a human operator. It should be noted that aviolation may be flagged in the context of a single account, or a tradeblock. As will be appreciated, human review and resolution of violationsis costly to the money manager both in terms of man-hours and monetaryexpense.

In the case of the restriction against ownership of AOL, an assetallocation as shown in Table 2 would produce a flagged restrictionviolation for human resolution. Conventionally, only three resolutionoptions are available. A human operator must make the decision as towhich of the three options to employ when resolving a flagged violationand must also oversee the execution of the chosen option.

As shown in Table 3, the first resolution option is known as a cashoption. In the cash option the amount that is associated with therestriction, i.e., the $1,000 that would have been invested in AOL, isinstead kept as cash. TABLE 3 ASSET HOLDING IBM $2,000 CKFR $1,000 STSH$3,000 AOL    $0 Cash $4,000

In the second option, as shown in Table 4 and known as the distributionoption, the amount that is associated with the restriction isdistributed across the non-restricted securities in the style model inaccordance with the model proportions. Thus, in the present example, theamount that would have been invested in AOL is instead spread acrossIBM, CKFR, and STSH in a 2:1:3 ratio. TABLE 4 ASSET HOLDING IBM $2,333CKFR $1,167 STSH $3,500 AOL    $0 Cash $3,000

In the third option, known as straight substitution, the amount that isassociated with the restriction is invested in any one or more of theother securities in the style model, or even in another security not apart of the style model. Thus, as shown in Table 5, AOL could bereplaced with EDS. TABLE 5 ASSET HOLDING IBM $2,000 CKFR $1,000 STSH$3,000 EDS $1,000 Cash $3,000

With the currently available resolution options, there is no ability todistribute the amount associated with the restriction across only aportion of the remaining assets included in the style model. Thus, thehuman operator cannot distribute the restricted amount among thosesecurities within a particular asset class, within a sector group, orwithin an issue type. Also with the currently available resolutionoptions, there is no ability to distribute the amount associated withthe restriction evenly across non-restricted securities, instead ofdistribution by ratio across non-restricted securities. Accordingly,existing techniques for resolution of a violation are constrained to alimited number of resolution options.

Problems with currently available portfolio management systems extendbeyond addressing violations in the context of a single account toaddressing violations involving trade blocks. Conventional portfoliomanagement systems only have limited capability to apply a resolution toless than all accounts within a trade block. The only way to achieve aunique resolution in an account within a trade block conventionally isby applying one resolution uniformly across all accounts in the tradeblock, then subsequently manually overriding that resolution on anaccount-by-account basis for each account requiring, as desired, adifferent resolution.

Further, conventional resolution techniques only provide the cash anddistribution options, described above, for resolving violations within atrade block. There is no ability to stipulate one security substitutionfor one account, and another security substitution for another account.Accordingly, there exists even more limited resolution options for anaccount that is a part of a trade block than for an individual account.

Finally, conventional portfolio management systems lack an audit trailof restriction violations and resolutions. Rather, there exists only ageneral tracking of any trades resulting from the manual resolution.Accordingly, there can be no monitoring or the effectiveness ofrestrictions and associated resolutions with currently availableportfolio management systems.

OBJECTIVES OF THE INVENTION

It is an objective of the invention to overcome one or more of theabove-described problems. Additional objects, advantages, novel featuresof the present invention will become apparent to those skilled in theart from this disclosure, including the following detailed description,as well as by practice of the invention. While the invention isdescribed below with reference to preferred embodiment(s), it should beunderstood that the invention is not limited thereto. Those of ordinaryskill in the art having access to the teachings herein will recognizeadditional implementations, modifications, and embodiments, as well asother fields of use, which are within the scope of the invention asdisclosed and claimed herein and with respect to which the inventioncould be of significant utility.

SUMMARY DISCLOSURE OF THE INVENTION

In accordance with the present invention, a computerized method and asystem for resolving a violation of an investment account restrictionare provided. An investment account is associated with one or moreinvestors and contains assets which can include, but are not limited to,cash and securities. An investment account restriction is a directiveconcerning those assets. Oftentimes a restriction directs that a certainasset not be held in the account. However, a restriction could alsodirect other aspects of an investment account's holdings. Such an aspectcould be, but is not limited to, that an investment account always holda certain asset, or that a certain amount of a particular asset alwaysbe held in an investment account. A violation of an investment accountrestriction can occur different ways. For example, a violation coulddevelop over time as the values of various held assets fluctuate, or aviolation could be the result of a trade or other transaction ordered byan entity managing an investment account. Of course, a violation couldoccur in a different manner.

The system includes at least a memory and a processor. The memory isconfigured to store information associated with restrictions andrestriction resolutions. The memory could be any type of data repositorycapable of storing data. The processor is configured to implement themethod as described herein and could be any type of processor capable offunctioning to implement the method, including, but not limited to, aprocessor as found in a typical personal computer, main-frame computer,server-type computer, or any other type computing device.

A restriction definition and an associated resolution rule are stored. Aresolution rule dictates an action to be taken to cure a violatedrestriction. Thus, information identifying an action to be taken uponthe occurrence of a restriction violation is stored in association withinformation identifying the restriction.

In both the computerized method and system, an order is received toperform some management action associated with the investment account.This order could be received from any entity having authority totransact the investment account. A management action can be any type ofaction that has the potential to result in a change in the holdings ofthe assets of the investment account, such as, but not limited to, apurchase of one or more securities, a sale of one or more securities, ora rebalancing of the investment account.

A determination is made from a processing of the received order thatperformance of the action violates the stored restriction definition. Asa result of this determination, the resolution rule associated with therestriction definition is retrieved from storage. The retrievedresolution rule is then executed in completing the action. Execution ofthe resolution rule may replace a portion of the action, may replace allof the action, or may simply supplement the action. An indication of thedetermined violation and an indication of the execution of theresolution rule is stored. Thus, occurrence of both the violation andthe resolution is tracked.

In another aspect of the present invention, the stored restrictiondefinition and the associated resolution rule pair are associated witheither a single investment account, an investment style under which oneor more investment accounts are transacted, an investment program withwhich one or more investment accounts are associated, or a client withwhich one or more investment accounts are associated.

According to another aspect of the present invention, the restrictiondefinition prohibits a holding of a first security in an investmentaccount, and the resolution rule specifies substituting a holding of asecond security for a holding of the first security. Thus, one securityis restricted from being held in the investment account, and anothersecurity is designated as a replacement security for the restrictedsecurity.

In a further aspect, the restriction definition is a first restrictiondefinition and the resolution rule is a first resolution rule. A secondrestriction definition and associated second resolution rule are alsostored. This second restriction definition prohibits a holding of thesecond security, and the second resolution rule specifies substituting aholding of a third security for a holding of the second security. Adetermination is made that executing the first resolution rule violatesthe stored second restriction definition, and as a result of thisdetermination, the second resolution rule is retrieved from storage. Theretrieved second resolution rule is then executed in completing theaction. Thus, a resolution of a violation of the first restrictionviolates a second restriction, and accordingly the second resolutionrule is executed.

According to another aspect of the present invention, upon completion ofthe action, an amount of a first security would be held. The storedrestriction definition prohibits any holding of this first security. Theassociated resolution rule specifies substituting a holding of a secondsecurity for a first portion of the amount of the first security andsubstituting a holding of another asset for a second portion of theamount of the first security. The other assets could be one of cash or athird security. Thus, the resolution rule specifies more than aone-for-one replacement. Rather, a first portion of a restrictedsecurity is replaced with one asset, and second portion of therestricted security is replaced with another asset.

According to still another aspect of the present invention, theinvestment account is associated with a style model and the investmentaccount management action is one of a plurality of investment accountmanagement actions. Information associated with each of the plurality ofinvestment account management actions is stored. The stored actioninformation is processed, other than any information associated with theone action, to determine a performance of the style model. Thus, therestriction violation will not affect the determination of theperformance of the style mode.

In another aspect, the restriction definition prohibits a holding of afirst security, and the resolution rule includes at least one criteriafor determining one or more assets to substitute for a holding of thefirst security. Execution of the retrieved resolution rule includesdetermining the one or more assets for substitution. Thus, the assetsfor substitution may change from one execution of the rule to another.

According to yet another aspect of the invention, the restrictiondefinition prohibits a holding of a first group of securities in aninvestment account, and the resolution rule specifies substituting aholding of a second group of securities for a holding of the first groupof securities. The first group of securities belongs to either the sameindustry sector, the same issue type, or the same security rating.Similarly, the second group of securities belongs to either the sameindustry sector, the same issue type, or the same security rating. Thus,securities sharing at least one common trait are replaced withsecurities sharing at least one common trait.

In still another aspect of the present invention, the action isassociated with a model that includes a group of securities. The modelidentifies a proportion of each security in the group. Thus, the modeldictates how much of each security to hold. In this aspect, therestriction definition prohibits holding a first security. However, thisfirst security is included in the group. The resolution rule specifiessubstituting a cash equivalent for the prohibited security across atleast a portion of the other securities of the group in accordance withthe model proportions.

According to yet another aspect of the present invention, the action isassociated with a model that includes a group of securities. The modelidentifies a proportion of each security in the group. The restrictiondefinition prohibits holding a first security. As with the above,aspect, this first security is included in the group. The resolutionrule specifies substituting a cash equivalent for the prohibitedsecurity evenly across at least a portion of the other securities of thegroup. Thus, the model, in this aspect, does not control thesubstitution.

In still another aspect of the present invention, the action isassociated with either a single investment account, or a group ofinvestment accounts. Thus, the action is targeted to, or affects, eitherone or multiple investment accounts.

According to yet another aspect, the action is associated with a groupof investment accounts, the resolution rule is a first resolution ruleassociated with a first one of the group of investment accounts, andexecuting the first resolution rule only affects the first investmentaccount. A second resolution rule associated with the restrictiondefinition is stored. This second resolution rule is associated with atleast a second one of the group of investment accounts. The secondresolution rule is retrieved based upon the determination, and isexecuted in completing the action.

In a different aspect of the present invention, the resolution rule is afirst resolution rule, and at least a second resolution rule is storedin association with the restriction definition. The at least secondresolution rule is retrieved based upon the determination. Adetermination is made that the retrieved first resolution rule has ahighest priority among the retrieved resolution rules. Based upon thisdetermined highest priority, only the first resolution rule is executed.Thus, the multiple resolution rules are prioritized, with the highestpriority rule being executed. In a further aspect, each retrievedresolution rule is associated with a different entity and the priorityis determined based upon the entity with which each resolution rule isassociated.

BRIEF DESCRIPTION OF DRAWINGS

In order to facilitate a fuller understanding of the present invention,reference is now made to the appended drawings. These drawings shouldnot be construed as limiting the present invention, but are intended tobe exemplary only.

FIG. 1 is a simplified depiction of a money manager portfolio managementsystem in accordance with certain aspects of the present invention.

FIG. 2 depicts exemplary processing performed in accordance with certainaspects of the present invention.

FIG. 3 is a simplified data entity relationship diagram depicting ahierarchy between different levels of restriction in accordance withcertain aspects of the present invention.

PREFERRED EMBODIMENT

FIG. 1 is an exemplary depiction of a money manager portfolio managementsystem (MMPMS) 1036 in accordance with the present invention. As shown,the MMPMS 1036 includes a processor 1036A and memory 1036B. A stylemodel (SM) is stored in the memory 1036B. The processor 1036A isconfigured (i.e. programmed) with the logic necessary, to performvarious functions.

As desired, the MMPMS 1036 may interface to systems associated with oneor more brokers, brokerage firms, and/or investors, as well as otherentities. Any interfacing may include synchronous or asynchronouscommunications. One or more tokens associated with the money managercould support both identity authentication and access control.

Introduced above, the MMPMS processor 1036A includes the logic, e.g.programmed instructions, necessary to perform various functions. Asshown, these functions include an inventive SMCA restrictionidentification and resolution function 1036A5, to be discussed furtherbelow. Other conventional functions may, as desired, also be included.These functions may include, but are not limited to, a rebalance SMCAstyle function 1036A1, a SMCA style drift function 1036A2, a generateSMCA style trade directive function 1036A3, and a generate SMCA stylestatements function 1036A4.

As noted above, the MMPMS 1036 stores a style model in the memory 1036Bfor the investment style utilized by the money manager. Beneficially,the MMPMS 1036 could provide functions that relate to the building andmaintenance of the style model. The MMPMS 1036 stores the applicable SMboth to record modifications made by the applicable money manager, aswell as to perform functions executable by the processor 1036A on arelevant portion, or all, of a single managed client account (SMCA). Inone alternative, the financial advisor working directly with an investorand the investor could have a rep-as-manager relationship in which thefinancial advisor manages that investor's entire investment, and thusacts like a money manager. Alternatively, the money manger and theinvestor could have a more distant relationship, in that one or moreother entities, such as a broker and/or brokerage firm are situatedbetween that investor and the money manager. In this situation, themoney manager may manage only a portion of the investor's account, ormay manage the entire account. Additionally, it will be appreciated thatthe money manager will preferably manage, either entirely or partially,multiple SMCAs.

The memory 1036B also stores identifying information associated with theSMCA. This identifying information includes information identifying atleast one of the investor and/or a client associated with the investor.The stored information also preferably includes information identifyingany program with which the account is associated.

With regard to the rebalance SMCA style function 1036A1, the moneymanager may, as desired or necessary, rebalance the relevant portion ofthe single managed client account. This allows the money manager tobring the relevant portion of the single managed client account managedin accordance with that money manager's style back in line with the SMfor that style. To do this, the processor 1036A executes the rebalanceSMCA style function 1036A1 to determine the deviation of the relevantportion of the single managed client account from the SM stored in thememory 1036B. It then generates trade directives by executing thegenerate SMCA style trade directive function 1036A3 to reduce oreliminate the determined deviation and thereby place the relevantportion of the single managed client account in line with the applicableSM.

Drift within the relevant portion of the single managed client accountis monitored and managed by executing the SMCA style drift function1036A2. The execution of this function by the MMPMS processor 1036Aallows the monitoring and managing of drift within the relevant portionof the single managed client account in an automated manner. Moreparticularly, by executing the drift function 1036A2, the MMPMS 1036 isable to identify whether a security or other holding in the relevantportion of the single managed client account has drifted outside of arange from a position for that security or holding included in the SM orin other data stored in the memory 1036B, or otherwise identified. Forexample, the range may be established in real time by the processor1036A if so desired. In any event, the processor 1036A then executes thegenerate SMCA style trade directive function 1036A3 to initiate tradedirectives in order to reduce or eliminate the drift, and thereby placethe relevant portion of the single managed client account in line withthe applicable SM.

The SMCA restriction identification and resolution function 1036A5 is afully automated function that may be, as desired, invoked based uponoccurrence of one or more events, including completion of one or moreother functions, invoked at a particular time, or invoked on an ad hocbasis. The SMCA restriction identification and resolution function1036A5 leverages data stored in the memory 1036B. The stored data, foreach restriction, includes a restriction definition and a restrictionviolation resolution. This information will often be referred to hereinas a restriction definition/violation resolution pair. As discussedabove, a restriction can be associated with an individual account, astyle, a program, a client, or a strategy. Restriction data may bereceived from an individual investor, or an entity associated with theinvestor, such as a financial advisor, broker, brokerage firm, or themoney manager. As will be understood, often a financial advisor and abroker are the same entity. It should also be pointed out that anaccount could be subject to multiple restrictions, perhaps instituted atdifferent levels, i.e., at the individual account level, at the stylelevel, at the program level, or at the client level.

A restriction definition includes a restriction identifier andinformation identifying a restriction level, e.g., account level, stylelevel, program level, a strategy and client level, a subject asset,e.g., cash or a particular stock, and attributes of the restriction. Ifthe restriction is an account level restriction, the definition alsoidentifies the account (and thus indirectly the investor) and optionallyother identifying information specific to that particular restriction,such as, for example, the entity making the restriction. The scope ofeffect of an account level restriction would be only the identifiedaccount. If the restriction is a style level restriction, the definitionidentifies the particular style model and optionally other identifyinginformation specific to that particular restriction, such as, forexample, the entity making the restriction. The scope of effect of astyle level restriction would be all accounts associated with theidentified style. If the restriction is a program level restriction, thedefinition identifies at least the restricted program, and optionallyother identifying information specific to that particular restriction,such as, for example, the client making the restriction. The scope ofeffect of a program level restriction would be all accounts associatedwith the identified program. If the restriction is a client levelrestriction, the definition identifies the client. The scope of effectof a client level restriction would be all accounts associated with theidentified client. Note that, while these specific four levels arecontemplated, it is not necessary that all four levels be supported, andother levels are possible and would be treated similarly.

A restriction could be, but is not limited to, a prohibition against anyholding of the subject asset, information identifying a minimum ormaximum holding of the subject asset, and/or information identifying atarget transaction price of the subject asset such that the subjectasset is either sold or purchased based upon the target transactionprice. Of course, other restrictions could be, as desired, identified inthe attributes.

Note that a restriction could be defined for a particular time periodonly. Furthermore, a restriction can be defined as a “hard” restrictionor a “soft” restriction. A “hard” restriction must be followed, withoutexception, and thus particularly lends itself to fully automatedviolation detection and resolution processing, as described herein. A“soft” restriction can be overridden by entities with appropriateauthority,

A restriction violation resolution identifies activities to be performedin resolution of the identified restriction violation. If restrictionviolation resolution data is not received from the entity defining theresolution, the money manager will determine the stored restrictionviolation resolution

One particular type of restriction violation resolution is stipulationof a security substitution. In its simplest form, an entity coulddesignate a one-for-one substitution. However, as desired, a securitysubstitution could be more sophisticated. Sophisticated substitutionsavailable through the MMPMS 1036 include a chain of substitutions, ann-for-1 substitution, a group substitution, and a non-specificsubstitution.

In a chain of substitutions a first definition/violation resolution pairstipulates a substitution of a first security (security A) with a secondsecurity (security B), and a second restriction definition/violationresolution pair calls for a substitution of security B with a thirdsecurity (security C). Thus, if a style model includes security A,security A will be replaced with security C. The differentdefinition/violation resolution pairs could be each associated with adifferent restriction level. Also, it should be noted that a chain ofsubstitutions could be any number of pairs deep. In execution, a chainof substitutions could be treated as a single block, with only the finallink being executed, or individual links of the chain could execute inseries.

In an n-for-1 substitution the substitution replaces a restrictedsecurity with two or more different securities. As an example, adefinition/violation resolution pair could require that securities B andC replace security A. Further, a percentage of the replacementsecurities may be, as desired, identified, i.e., 60% security B and 40%security C. A money manager could limit the number of replacementsecurities, i.e., a maximum of three substitutions for a singlerestricted security might be allowed. Also, one of the replacements inan n-for-1 substitution could be cash. This supports simultaneouslybuying into a security and depositing in cash in lieu of buying into arestricted security.

A group substitution identifies a group of securities for replacementwith another group of securities. For example, a definition/violationresolution pair could require that all securities of a particularindustry sector be replaced with securities from another industrysector, i.e., replace all utility securities with biotechnologysecurities. Groups may be defined in many different ways in addition toindustry sector, including, but not limited to, issue type and securityrating. Preferably, the money manager will define the group typesavailable for selection by the entity establishing the restrictiondefinition/violation resolution pair.

A non-specific substitution is dynamic at the time of execution. Insteadof substituting a specific, well defined security, the security to besubstituted is determined at the time of substitution based upon thefunction of some defined rule. For example, the rule could stipulate“buy into the most underweighted security included in the style model”,or “sell from the most overweighted security”. Alternatively, the rulecould stipulate “buy into the most underweighted group” or “sell fromthe most overweighted group”, with the sum going into or coming out ofthe group either in accordance with model proportions or evenly. Thistype of substitution is advantageous in the context of specific tradesand “what if” analysis. However, it may be less relevant in the contextof new undesignated investments and rebalancing.

Another type of automated restriction violation resolution is astipulation that the amount associated with a restriction should be keptas cash. Unlike conventional money manager portfolio management systems,the MMPMS 1036 of the present invention can execute such withoutintervention of a human operator, as well as at the behest of an entityother than a money manager.

Still another type of automated restriction violation resolution is astipulation that the amount associated with a restriction should bedistributed across unrestricted securities included in the style in someparticular manner. In addition to a simple distribution in accordancewith the style model proportions, also available is a distributionacross some subset of securities held in the style model, which itselfcould be either in accordance with what the style model dictates forthat subset, evenly, or otherwise. The subset could be, as desired, agroup as discussed above. And, also available is an even distributionacross multiple unrestricted securities in the style model such thatequal portions of the restricted amount are distributed to each of themultiple unrestricted securities. It should be noted that the multipleunrestricted securities could be all, or less than all, the unrestrictedsecurities in the style model.

The MMPMS 1036 is configured to identify restriction violations in bothan individual account as well as in a trade block. Different than theprior art, the MMPMS 1036 includes the functionality to resolve a tradeblock restriction violation on an account-by-account basis. Therestriction violation resolution portion of a restrictiondefinition/violation resolution pair for a trade block may, as desired,identify unique resolutions for one or more accounts included in thetrade block. For example, a particular trade block violates arestriction on a first security (security A). A first account that is apart of the trade block has a resolution that substitutes a secondsecurity (security B) for security A, while a second account that is apart of the trade block has a resolution that substitutes a thirdsecurity (security C) for security A. Further, one or more of theremaining accounts that are a part of the trade block may have aresolution that stipulates keeping the amount associated with security Aas cash, while still others of the accounts of the trade block may havea resolution that stipulate distributing the amount associated withsecurity A across the remaining securities of the style model.

Introduced above, a restriction definition/violation resolution pair maybe established at any of the available levels. In this embodiment, thisincludes the following four, although there could be fewer or more:client, program, style, or account. Thus, it is possible that multiplerestriction definition/violation resolution pairs may apply to anysingle account or trade block, as discussed above in relation to thechain of substitutions. Further, it is even possible that multiplerestriction definition/violation resolution pairs may apply to the sameasset. Because of this, restriction definition/violation resolutionpairs are prioritized according to level, with chain substitutions beingan exception that allows different rules to both take effect together.

FIG. 3 is a data entity relationship diagram depicting the hierarchybetween restriction levels. A typical prioritization scheme is to applyrestriction definition/violation resolution pairs in reverse order ofthe hierarchy shown in FIG. 3. In such a scenario, account levelrestrictions override other level restrictions, followed by style levelrestrictions, then program level restrictions, and finally client levelrestrictions. Of course, as desired, the levels could be ordereddifferently.

The MMPMS 1036 detects when multiple restriction definition/violationresolution pairs conflict, i.e., apply to the same asset. If an accountlevel restriction conflicts with any other level restriction, the MMPMS1036 executes the violation resolution associated with account levelrestriction, if a style level restriction conflicts with either aprogram or client level restriction, the MMPMS 1036 executes theviolation associated with the style level restriction, and so on.

The MMPMS 1036 tracks the occurrence of restriction violations andresolutions. Whenever a restriction violation is detected, the MMPMS1036 stores information associated with that detection in memory 1036B,sometimes referred to as tracking data. This stored information includesthe restriction identifier, level of the restriction (i.e., account,style, program, or client), a user identifier, if performing a manualoverride, a timestamp of the identification and/or resolution, any andall actions taken to resolve the violation, the reason for the action(s)taken, i.e., dictated by a stored violation resolution, and anidentification of any trading tool used in the resolution. Also, anidentifier of a user who triggered an automated restriction andresolution can, as desired, be stored. The generate SMCA stylestatements function 1036A4 is executed by the processor 1036A togenerate a statement for the portion of the investor's account managedin accordance with the SM stored in the memory 1036B of the MMPMS 1036.

The generate SMCA style statements function 1036A4 also producesreports, based upon the stored information associated with a violationand resolution. These reports may be by category such that actionsresulting from standard rebalancing and trades can be separated fromactions taken to resolve restriction violations. The stored violationand resolution information can be included in any report as detailedinformation for use by a human reviewer in responding to questions posedduring auditing. The reports may also be used for trend analysis suchthat over time reports can identify frequency patterns of certainrestriction violations occurring or certain violation resolutions beingexecuted. Also, the SMCA style statements function 10036A4 producesperformance reports reflecting the performance of the style over time.The stored violation and resolution information is used to excludeviolations and resolutions from the style performance reports.

FIG. 2 is a simplified exemplary depiction of processing performedduring execution of the SMCA restriction identification and resolutionfunction 1036A5 for a particular SMCA. The example of FIG. 2 assumesthat chains of substitutions are not included in restriction types. Atstep 201 the processor 1036A begins execution of the function. At step205 the processor 1036A determines, based upon the stored SMCAidentifying information and the stored restriction definitions, if theSMCA is subject to any client level restrictions. If not, operationscontinue with step 210. If the SMCA is subject to one or more clientlevel restrictions, at step 207 those client level restrictiondefinition/violation resolution pairs are flagged for later processingand operations continue with step 210.

At step 210 the processor 1036A determines, based upon the stored SMCAidentifying information and restriction definitions, if the SMCA issubject to any program level restrictions. If not, operations continuewith step 215. If the SMCA is subject to one or more program levelrestrictions, at step 212 those program level restrictiondefinition/violation resolution pairs are flagged for later processingand operations continue with step 215.

At step 215 the processor 1036A determines, based upon the stored SMCAidentifying information and restriction definitions, if the SMCA issubject to any style level restrictions. If not, operations continuewith step 220. If the SMCA is subject to one or more style levelrestrictions, at step 217 those style level restrictiondefinition/violation resolution pairs are flagged for later processingand operations continue with step 220.

At step 220 the processor 1036A determines, based upon the stored SMCAidentifying information and restriction definitions, if the SMCA issubject to any account level restrictions. If not, operations end. Ifthe SMCA is subject to one or more account level restrictions, at step222 those account level restriction definition/violation resolutionpairs are flagged for later processing and operations continue with step225.

At step 225 the processor 1036A determines if there is a conflictbetween retrieved restriction definition/violation resolution pairs, orif there is duplication among retrieved restriction definition/violationresolution pairs. Obviously, if only one restrictiondefinition/violation resolution pair has been retrieved, thedetermination in step 225 will be negative. However, if multiple pairshave been retrieved, the processor 1036A determines if the same subjectasset is identified in two or more pairs. If so, a conflict orduplication is identified, and operations continue with step 237. If thedetermination in step 225 is negative, operations continue with step230.

At step 230 the processor 1037A executes the first flagged violationresolution. Following execution of the first flagged violationexecution, operations continue with step 232 in which the processor1036A stores in memory 1036B the tracking information associated withthe detected violation and executed resolution, discussed above. Then,at step 234 the processor 1036A determines if any other flagged pairsremain unexecuted. If not, operations end. If so, operations continuewith step 235 in which the next flagged violation resolution isexecuted. When all flagged violation resolutions have been retrieved,and appropriate tracking data has been stored, operations end.

If in step 225 the determination is positive, operations continue withstep 237 in which the processor 1036A executes the last flaggedconflicting or duplicate violation resolution and discards the remainingconflicting or duplicate flagged restriction definition/violationresolution pair(s). At step 240 the processor 1036A stores in the memory1036B tracking information associated with each identified conflictingor duplicate restriction violation and the one executed violation. Theprocessor 1036A then determines if any non-conflicting or non-duplicaterestriction definition/violation resolution pairs have been flagged,step 242. If not, operations end. This effectively implements aprioritization that puts account level rules at the top, and clientlevel rules at the bottom. As will be appreciated, a differentprioritization could, as desired, be implemented.

If the determination of step 242 is positive, operations continue withstep 245 in which the processor 1036A executes the first flaggednon-conflicting or non-duplicate violation resolution. Followingexecution of the first flagged non-conflicting or non-duplicateviolation execution, operations continue with step 247 in which theprocessor 1036A stores in memory 1036B the tracking informationassociated with the detected violation and executed resolution. Then, atstep 250 the processor 1036A determines if any other flaggednon-conflicting or non-duplicate pairs remain unexecuted. If not,operations end. If so, operations continue with step 255 in which thenext flagged non-conflicting or non-duplicate violation resolution isexecuted. When all flagged non-conflicting or non-duplicate violationresolutions have been executed, and appropriate tracking data has beenstored, operations end.

While this invention has been described in the context of functionalitywithin a money manager portfolio system supporting a money manager, itshould be noted that this functionality could be triggered by oravailable to another entity's (e.g., a client's) portfolio managementsystem.

The present invention is not to be limited in scope by the specificembodiments described herein. Indeed, various modifications of thepresent invention in addition to those described herein will be apparentto those of skill in the art from the foregoing description andaccompanying drawings. Thus, such modifications are intended to fallwithin the scope of the appended claims.

1. A computerized method for resolving a violation of an investmentaccount restriction, the restriction associated with the holding of oneor more securities in an investment account, comprising: storing arestriction definition and an associated resolution rule in a datarepository; receiving an order to perform an investment accountmanagement action; processing the received order to determine thatperformance of the action violates the stored restriction definition;retrieving the associated resolution rule from the data repository basedupon the determination; executing the retrieved resolution rule incompleting the action; and storing an indication of the determinedviolation and an indication of the execution of the resolution rule inthe data repository.
 2. The method of claim 1, wherein: the restrictiondefinition is associated with one of (i) a single investment account,(ii) an investment style under which one or more investment accounts aretransacted, (iii) an investment program with which one or moreinvestment accounts are associated, and (iv) a client with which one ormore investment accounts are associated; and the resolution rule isassociated with one of (i) the single investment account, (ii) theinvestment style, (iii) the investment program, and (iv) the client. 3.The method of claim 1, wherein: the restriction definition prohibits aholding of a first security in an investment account; and the resolutionrule specifies substituting a holding of a second security for a holdingof the first security.
 4. The method of claim 3, wherein the restrictiondefinition is a first restriction definition and the resolution rule isa first resolution rule, and further comprising: storing a secondrestriction definition and an associated second resolution rule in thedata repository, the second restriction definition prohibiting a holdingof the second security in an investment account, and the secondresolution rule specifying substituting a holding of a third securityfor a holding of the second security; determining that executing thefirst resolution rule violates the stored second restriction definition;retrieving the second resolution rule from the data repository basedupon the determination that execution of the first rule violates thestored second restriction definition; and executing the retrieved secondresolution rule in completing the action.
 5. The method of claim 1,wherein: performance of the action would result in a holding of anamount of a first security; the restriction definition prohibits aholding of the first security in an investment account; the resolutionrule specifies substituting a holding of a second security for a firstportion of the amount of the first security and substituting a holdingof another asset for a second portion of the amount of the firstsecurity; and the other asset is one of cash or a third security.
 6. Themethod of claim 1, wherein the investment account is associated with astyle model and the investment account management action is one of aplurality of investment account management actions, and furthercomprising: storing information associated with each of the plurality ofinvestment account management actions in the data repository; processingthe stored investment account management action information, other thaninformation associated with the one investment account managementaction, to determine a performance of the style model.
 7. The method ofclaim 1, wherein: the restriction definition prohibits a holding of afirst security in an investment account; the resolution rule includes atleast one criteria for determining one or more assets to substitute fora holding of the first security; and executing the retrieved resolutionrule includes determining the one more assets for substitution.
 8. Themethod of claim 1, wherein: the restriction definition prohibits aholding of a first group of securities in an investment account; theresolution rule specifies substituting a holding of a second group ofsecurities for a holding of the first group of securities; the firstgroup of securities belongs to one of (i) a same industry sector, (ii) asame issue type, and (iii) a same security rating; and the second groupof securities belongs to one of (i) a same industry sector, (ii) a sameissue type, and (iii) a same security rating.
 9. The method of claim 1,wherein: the action is associated with a model that includes a group ofsecurities, the model identifying a proportion of each security in thegroup; the restriction definition prohibits holding a first security inan investment account; the first security is included in the group; theresolution rule specifies substituting a cash equivalent for thesecurity across at least a portion of the other securities of the groupin accordance with the model proportions.
 10. The method of claim 1,wherein: the action is associated with a model that includes a group ofsecurities, the model identifying a proportion of each security in thegroup; the restriction definition prohibits holding a first security inan investment account; the first security is included in the group; theresolution rule specifies substituting a cash equivalent for thesecurity evenly across at least a portion of the other securities of thegroup.
 11. The method of claim 1, wherein the action is associated withone of (i) a single investment account, and (ii) a group of investmentaccounts.
 12. The method of claim 1, wherein the action is associatedwith a group of investment accounts, the resolution rule is a firstresolution rule associated with a first one of the group of investmentaccounts, and executing the first resolution rule only affects the firstinvestment account, and further comprising: storing a second resolutionrule associated with the restriction definition in the data repository,the second resolution rule associated with at least a second one of thegroup of investment accounts; retrieving the second resolution rule fromthe data repository based upon the determination; and executing theretrieved second resolution rule in completing the action.
 13. Themethod of claim 1, wherein the resolution rule is a first resolutionrule, and further comprising: storing at least a second resolution rulein association with the restriction definition in the data repository;retrieving the at least second resolution rule from the data repositorybased upon the determination; and determining that the retrieved firstresolution rule has a highest priority among the retrieved resolutionrules; wherein only the first resolution rule is executed based upon thedetermined priority.
 14. The method of claim 13, wherein each retrievedresolution rule is associated with a different entity and the priorityis determined based upon the entity with which each resolution rule isassociated.
 15. A system for resolving a violation of an investmentaccount restriction, the restriction associated with the holding of oneor more securities in an investment account, comprising: a memoryconfigured to store a restriction definition, an associated resolutionrule, an indication of the determined violation, and an indication ofthe execution of the resolution rule; and a processor configured toreceive an order to perform an investment account management action, toprocess the received order to determine that performance of the actionviolates the stored restriction definition, retrieve the associatedresolution rule from the memory based upon the determination, executethe retrieved resolution rule in completing the action, and to cause thememory to store the indication of the determined violation, and theindication of the execution of the retrieved resolution rule.
 16. Thesystem of claim 15, wherein: the restriction definition prohibits aholding of a first security in an investment account; the resolutionrule specifies substituting a holding of a second security for a holdingof the first security; the restriction definition is a first restrictiondefinition; the resolution rule is a first resolution rule; the memoryis further configured to store a second restriction definition and anassociated second resolution rule, the second restriction definitionprohibiting a holding of the second security in an investment account,and the second resolution rule specifying substituting a holding of athird security for a holding of the second security; and the processoris further configured to determine that executing the first resolutionrule violates the stored second restriction definition, retrieve thesecond resolution rule from the memory based upon the determination thatexecution of the first rule violates the stored second restrictiondefinition, and to execute the retrieved second resolution rule incompleting the action.
 17. The system of claim 15, wherein: the actionis associated with a group of investment accounts; the resolution ruleis a first resolution rule associated with a first one of the group ofinvestment accounts; executing the first resolution rule only affectsthe first investment account; the memory is further configured to storea second resolution rule associated with the restriction definition, thesecond resolution rule associated with at least a second one of thegroup of investment accounts; and the processor is further configured toretrieve the second resolution rule from the memory based upon thedetermination, and to execute the retrieved second resolution rule incompleting the action.
 18. The system of claim 15, wherein: theresolution rule is first resolution rule; the memory is furtherconfigured to store at least a second resolu5tion rule in associationwith the restriction definition; and the processor is further configuredto retrieve the at least second resolution rule from the memory basedupon the determination, determine that the retrieved first resolutionrule has a highest priority among the retrieved resolution rules, and toexecute only the first resolution rule based upon the determinedpriority.
 19. The system of claim 15, wherein: the restrictiondefinition is associated with one of (i) a single investment account,(ii) an investment style under which one or more investment accounts aretransacted, (iii) an investment program with which one or moreinvestment accounts are associated, and (iv) a client with which one ormore investment accounts are associated; and the resolution rule isassociated with one of (i) the single investment account, (ii) theinvestment style, (iii) the investment program, and (iv) the client. 20.The system of claim 15, wherein: the investment account is associatedwith a style model; the investment account management action is one of aplurality of investment account management actions; the memory isfurther configured to store information associated with each of theplurality of investment account management actions; and the processor isfurther configure to process the stored investment account managementaction information, other than information associated with the oneinvestment account management action, to determine a performance of thestyle model.